Monthly Archives: August 2018

It seems every day more information emerges about the devastating impact the Washington DC financed ‘Invest in Ed’ initiative would have on Arizona taxpayers and small business owners.

Recently it was revealed that the proposed measure would repeal the automatic indexing of Arizona’s tax brackets – triggering a permanent and ever-growing tax increase on low and middle-income people and families.  This tax hike contradicts months of promises by the supporters of the measure that it would only raise taxes on the “rich.”

Now it has been confirmed that Arizona would have the 4th Highest Small Business Tax Rate in the Country if this initiative is passed in November.

Jared Walczack, Senior Policy analyst at the Tax Foundation, confirmed to the Arizona Free Enterprise Club that a near doubling of Arizona’s income tax would vault Arizona to 4th highest small business tax rate in the nation. “In most states, as with Arizona, the tax on pass-through income is just the personal income tax. If Arizona jumped to nine percent, it would now be fourth (in the country), behind California, Oregon and Minnesota for the highest rate.”

Arizona currently has the 38th highest small business tax in the country, a ranking that makes our state attractive to entrepreneurs and small business owners.

Recent changes made by federal tax reform will only magnify the tax hit. Under the Tax Cuts and Jobs Act passed in 2017, the State and Local Tax Deduction was capped, limiting how much a small business may deduct in Arizona income taxes. “Given the recent cap placed on the SALT deduction, the tax cost of such high rates (on small businesses) is higher than ever.” Walczack said.

Exacerbating the tax hit is the fact that the new higher tax rates would not apply to corporations. Publicly traded companies and Fortune 500 businesses will be taxed at half the rate (4.9%) than most small businesses, an unfair advantage that will grow over time.

Arizona taxpayers should reject this radical upheaval of our income tax system, and preserve the attractive tax climate in our state for small businesses.

Among the candidates running to become a member of the state legislature, Joanne Osborne may be the most dangerous one for taxpayers. Prior to being a candidate for the House in Legislative District 13, Osborne spent several years on the Goodyear City Council, consistently voting for higher taxes, fees and increased water rates even though the city was running a surplus.

In 2009, Joanne Osborne led the charge to permanently increase Goodyear’s sales tax rate from 2.0 to 2.5 percent (a 25% increase), giving the city one of the highest sales tax rates in the West Valley.* This was despite the fact that the city had a budget surplus at the time and money in their rainy-day fund. Osborne didn’t listen to taxpayers or affected businesses owners, but rather to government staff and City Manager Fischbach, who claimed that the tax increase was needed to “stay ahead of the game.”

Raising property taxes and license fees was also on Joanne Osborne’s radar. On three separate occasions (2010, 2011 and 2015), Osborne voted to increase property taxes.** She supported all of these tax increases knowing that the city had a budget surplus and didn’t need the money. She also backed a new $75 annual license fee for all businesses (Goodyear didn’t charge a license fee prior to 2009), an unnecessary charge that served no other purpose than to generate more cash for City Hall.

Osborne didn’t stop with higher sales and property tax rates. A few years later she was back pushing for more revenue for the City through higher water and wastewater rates. In 2015, Joanne Osborne voted to DOUBLE Goodyear’s water rates, from an average of $21.63 per month to $42.36.*** Wastewater rates went up by 12% as well to $56.33. These rapid increases were neither justified or warranted, especially after Osborne ushered in the extravagant sales and property tax increases a few years earlier.

Now Joanne Osborne wants to take her liberal tax and spend policies to the State Legislature. The voters of LD 13 would be wise to not let that happen.

 

 

 

 

 

 

*Surplus Has Leaders Questioning Tax Hike. https://www.newspapers.com/image/116979862/ Arizona Republic Jan 17, 2010

**Goodyear Council Records 2010,2011 and 2015

***Goodyear Rates to Double Over Five Years. https://www.rgj.com/story/news/local/southwest-valley/2015/11/02/goodyear-water-rates-double-over-5-years/74764030/ Arizona Republic Nov 2nd, 2015

 

 

Paid for the Arizona Free Enterprise Club. Not Authorized by any Candidate or Candidate Committee.

Since the proposition to double Arizona’s income tax was unveiled in early May, proponents of the measure emphatically promised voters that the only people affected by the tax increase was the “rich.”

That promise has already expired. Last month after filing 270,000 signatures with the Secretary of State, it was revealed that the “Invest in Ed” initiative would eliminate the inflation indexing of our income tax brackets and reset every tax bracket to 2014 levels.  The primary purpose for indexing the income tax brackets for inflation was to shield low and middle-income taxpayers from the cost of living inflation tax that occurs over time.

The irreversible elimination of inflation indexing would result in everyone’s income taxes going up in Arizona – to the tune of $49 Million in the first year, a figure that will grow exponentially over time.

Even worse, there is no real opportunity to fix this problem.  If this measure is passed, the proposition would be voter protected, meaning that it cannot be changed by the legislature. Even if a ¾ majority vote of the legislature agreed to bring back inflation indexing, it would still be illegal since lowering taxes would not further the intent of the proposal.

As more analysis is being done on this initiative to make Arizona the 5th highest income tax state in the country, the clearer it has become that the Washington DC Labor Unions that financed this measure cared little about making sure that all of their claims were even accurate.

But as the saying goes, “the devil is in the details,” and the proposed largest tax increase in our state’s history has a lot of hidden, unexpected, and negative consequences for the future of Arizona.

 



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